Foreign Investors Are Back: Is the Housing Market Currently Undervalued?

After a period of subdued activity, foreign capital is once again flowing into Sweden—this time with a growing focus on residential properties. New figures from Colliers reveal signs that the market is entering a new phase, marked by increased liquidity and rising investor appetite.

“Right now, it's primarily residential assets that are attracting international buyers. We're seeing a clear net buying position, in contrast to the office segment, where foreign investors have largely withdrawn,” says Axel Tärn, Head of Research at Colliers.

So far this year, residential transactions worth just over SEK 5 billion have involved foreign buyers. This represents nearly 26 percent of total residential transaction volume—a clear shift from the more cautious stance of recent years.

“These are well-capitalized, long-term investors that prefer regulated and predictable market segments. While core capital isn’t limited to housing, the fact that these players are now targeting both newly developed and older residential portfolios in Sweden suggests they’re acting on an opportunity that many domestic players are yet to fully embrace,” says Axel Tärn.

“Given today’s financing conditions and their access to capital, they can act swiftly—boosting overall market liquidity,” he adds.

Colliers believes this international interest could unlock entirely new opportunities. Historically, large-scale residential transactions have been difficult to execute. But with financially strong international investors—and a growing share of core investors—returning to the market, conditions are now in place for significant structured deals. This marks a broader movement across the Nordic real estate landscape.

“We’re seeing the early stages of a trend shift. Capital flows are on the move, and Sweden stands out as a market where recovery is ahead of our Nordic peers. International investors are positioning themselves for the next phase,” says Joakim Arvius, CEO of Colliers Sweden.

He notes that the investment case for international capital in Swedish housing has strengthened considerably in just a year. Interest rates have come down, yield requirements have adjusted upward, and the residential segment offers stable cash flows thanks to regulated rents and low economic sensitivity. In a world defined by uncertainty, Sweden stands out as a stable and transparent market—drawing foreign capital.

So far, most investments have been in newly built housing. But there is a clear window of opportunity in older portfolios as well—though vacancies require more careful underwriting.

“The return of well-capitalized, long-term buyers to the Swedish residential market changes the playing field. Larger portfolios that were previously difficult to sell may now be placed in full. It’s crucial to act while this window is open—those who don’t risk missing out,” says Joakim Arvius.

He believes the current momentum will improve market dynamics:

“If deal activity picks up again—with new types of buyers and larger volumes—it won’t just improve liquidity; it could lead to a revaluation of residential assets. And unlike previous phases, we don’t expect this interest to fade quickly. The real question is whether housing is currently being undervalued by the market,” concludes Joakim Arvius.